Q&A: The ins and outs of Obamacare

A Last year 95 percent of U.S. employers with at least 50 workers provided health coverage. And 98 percent of workers at firms of this size were employed by a company that offered health coverage.

Q Are small employers subject to the employee mandate penalties that now take effect on Jan. 1, 2015?

A Not if they have fewer than 50 employees. Firms with 50 full-time equivalent workers but no employee who receives a premium tax credit to purchase coverage on the exchange also will not be penalized.

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Q Why are only small companies with fewer than 25 employees eligible for tax credits to help them pay for employee coverage?

A Because these small employers have the lowest levels of employee health coverage mainly because of cost. The tax credits – worth 35 percent of employer contributions to coverage in 2013 and 50 percent in 2014 – provide the additional funding that makes insurance more affordable for companies with limited resources.

Q Why does the Affordable Care Act require most individuals to purchase coverage or face a fine for noncompliance?

A The so-called individual mandate is the most unpopular provision of the Affordable Care Act, but it is also the most important because it makes the law’s insurance market changes work properly. The ACA bars insurers from denying coverage to people with pre-existing health problems; charging higher premiums based on health status and placing annual and lifetime limits on covered benefits. Without the individual mandate, these provisions would increase premium costs because they would encourage older, sicker people to get coverage, while healthy people would wait until they get sick to get insurance. The mandate discourages this behavior and promotes a mix of healthy and less-healthy people to enroll for coverage. That diversity of new enrollees helps keep premium costs in check.

Q How many people will be eligible for subsidies to help them purchase coverage on the exchanges? And who gets the subsidies?

A An estimated 26 million people will be eligible for tax credits to help pay for their coverage on the new marketplaces, according to Families USA. The amount of the tax credit is revealed after submitting an online application. The money is sent directly to the applicant’s insurance company to be applied to the premiums. Individuals and families who earn between 133 percent to 400 percent of the federal poverty level will be eligible for the tax credits. In 2013, that would be individuals who earn roughly $15,300 to $46,000 or four-person families earning roughly $31,300 to $94,200.

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